2021 (1) TMI 580 - AT - Income Tax

Assessment u/s 153A - Addition on account of interest on post-dated cheques (PDC) - HELD THAT - This addition has already been made in the original assessment proceedings u/s 143(3) and subject to appeal before CIT (A) and Now pending before ITAT same could not have been repeated once again in assessment proceedings under Section 153A - we direct the AO to delete the above addition on account of interest on PDC. Even otherwise this is a concluded assessment and same could have been tinkered only if any incriminating material found during the course of search. No such material was found during the course of search but the addition is made only for the reason that the ld. CIT (Appeals) has sustained the above addition in assessee s appeal against order under Section 143(3) - In view of this we direct the Assessing Officer to delete the addition. Addition on violation of the provisions of Section 40A(3) - assessee has found to have paid to various farmers and agriculturists for purchase of land in cash - HELD THAT - On perusal of the assessment order as well as the order of the ld. CIT (Appeals) we do not find that there is any reference to incriminating material found during the course of search. These are already part of the accounted entries in the books of accounts of the assessee. Therefore in the absence of any incriminating material respectfully following the decision of Hon ble Delhi High Court in CIT Vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT this addition deserves to be deleted. Also as relying on assessee s own case 2015 (5) TMI 384 - ITAT DELHI addition to be deleted. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment under Section 153A of the Income Tax Act.
2. Addition of interest on post-dated cheques (PDC).
3. Disallowance under Section 40A(3) of the Act.

Analysis:
1. The appeal challenged the assessment under Section 153A of the Income Tax Act, contending that no material belonging to the assessee was seized during the search operation on a related entity. The Tribunal found that the addition of interest on PDCs had already been addressed in a previous assessment and could not be repeated without new incriminating material. Thus, the Tribunal directed the Assessing Officer to delete the addition of interest on PDCs as it lacked a basis in the search material. The Tribunal emphasized that additions in a concluded assessment could only be made with new incriminating evidence found during a search.

2. The second issue pertained to the disallowance of an amount under Section 40A(3) of the Act for cash payments made for land purchase. The Tribunal noted that there was no reference to incriminating material found during the search in the assessment order. Citing the decision in CIT Vs. Kabul Chawla, the Tribunal held that without such material, the addition could not be sustained. Additionally, the Tribunal referred to previous decisions favoring the assessee in similar cases, directing the deletion of the disallowed amount under Section 40A(3) of the Act. The Tribunal highlighted that the mere existence of accounted entries in the books of accounts did not justify the disallowance without incriminating material.

3. The Tribunal dismissed the general grounds raised in the appeal, stating that they were of a general nature. Consequently, the appeal was partly allowed, with the Tribunal directing the deletion of the additions related to interest on PDCs and the disallowance under Section 40A(3) of the Act. The Tribunal's decision was pronounced in open court on a specified date.

This detailed analysis of the judgment from the Appellate Tribunal ITAT DELHI addresses the issues raised in the appeal comprehensively, highlighting the Tribunal's findings and directions regarding the validity of the assessment and specific additions/disallowances under the Income Tax Act.